Thursday, November 22, 2012

Lies, damned lies, and written Parliamentary answers! How the Civil Service bamboozles the public with bullshit!

On
19th November, Lord Myners, a Labour Peer who had previously tabled a Parliamentary
Question,(PQ), received his answer from
Lord Sassoon, Commercial Secretary for H.M.Treasury.

Lord
Myners had enquired if "...Her Majesty's Governmentcould be asked whether the Financial Services Authority is
examining money laundering by HSBC in Mexico..."

His
answer, to be found in Hansard source (Citation: HL Deb, 19th November 2012, c303w was given by Lord Sassoon, who replied;

"...The
Financial Services Authority is the regulator for financial institutions in the
UK. HSBC's operations in Mexico are not incorporated or authorised in the UK
and are, therefore, not under the FSA's supervisory jurisdiction. However, the
FSA maintains regular dialogue with the other regulatory authorities in
relation to their investigations into the HSBC Group..."

Well,
yes and no! You see, inside this apparently benign statement hides a heap of
half-truths and lies, and which tries to do more to get the FSA out of a
difficult spot, than to tell the truth to the British public.

Back in July 2012, it was announced
that "...Mexican regulators have imposed a fine of $27.5m (£17.7m) on
banking giant HSBC for its failure to comply with money-laundering regulations.

The fine comes a week after HSBC's
chief compliance officer resigned over allegations that the bank ignored warnings
that Mexican drug money was being allowed to pass through the bank.

Mexico's National Banking and
Securities Commission (CNBV) said it had imposed the fine against HSBC due to
its "non-compliance with anti-money laundering systems and controls".

HSBC Mexico issued a statement
acknowledging that it failed to report 39 suspicious transactions and had been
late in reporting 1,729 others.

"...HSBC Mexico recognises it
failed to strictly comply with banking regulations, and with the standards that
regulators and clients expect of our institution..." it said.

A week after the fining, a United
States Senate committee found that HSBC had provided a conduit for "drug
kingpins and rogue nations".

HSBC's head of compliance, David Bagley,
resigned at the Senate committee hearing. Speaking at the US Senate Permanent Sub-committee
on Investigations, David Bagley, Head of Group
Compliance, HSBC Holdings plc, said:

"...As I have thought about the structural
transformation of the bank's compliance function, I recommended to the Group
that now is the appropriate time for me and for the bank for someone new to
serve as the head of Group Compliance. I have agreed to work with the
bank's senior management towards an orderly transition of this important role..."

There
is something about all this that doesn't make any sense!

Lord
Sassoon said in the House of Lords that "... HSBC's operations in Mexico
are not incorporated or authorised in the UK and are, therefore, not under the
FSA's supervisory jurisdiction..."

So,
why is the Group Head of Group Compliance of the Holdings Company, based in the
UK, falling on his sword. According to Lord Sassoon's statement, it was nothing
to do with him.

The
only answer must be that HSBC Mexico must still have been somehow directly tied
into HSBC UK, for David Bagley to feel it necessary to resign.

But
if it is tied into the UK, then wouldn't that give the FSA a jurisdiction?

You
might very well think so, but remember, this is the fantasy world of smoke and
mirrors which is inhabited by the New Centurions of the FSA, who have been
getting a whole load of shit recently, and who don't like the criticism. It
might be a bit unpleasant if it were to be found that they should have been
exercising a far greater degree of regulatory control over HSBC and their dodgy
overseas holdings, because some irritating member of the House of Lords might
ask what the fuck they were doing while HSBC was laundering money for the
Mexican cartels?

No,
far better to get some tame civil servant to cobble together the usual weasel
worded answer to a (PQ), seeking to obfuscate and avoid telling the truth.

Hence
we got the answer as reported.

However,
what the answer failed to identify and report was the small fact that HSBC
Mexico, while it may not be incorporated in the UK, is a wholly-owned
subsidiary of a UK registered HSBC entity.

Whoops,
neat little trick that, set up some dodgy little Mexican operation, but then
tie it back into Head Office through a series of reversed inter-related company
holdings.

HSBC Latin America Holdings (UK) Ltd has its address at 8 Canada Square, London, E14 5HQ, and on 5th April 2012, a gentleman called Sandy Flockhart
retired as an
Executive Director of HSBC Holdings plc, with effect from 30 April 2012, after
a career spanning 37 years. He will be retained on the Board as a non-executive Director in
order for the Board to retain access to his extensive international experience.
Sandy will also retain his positions as Chairman of HSBC Bank plc, the Group's
principal UK and European subsidiary, as Chairman of HSBC Latin America
Holdings (UK) Limited and as a Director of HSBC Bank Middle East Ltd.

Now,
call me old fashioned, but a UK registered company that has as its Chief
Executive a man who is still chairman of HSBC Bank plc, and which has its
address in Canada Square, and which owns a Mexican bank 99.99%, might just
possibly be thought to be subject to FSA oversight, and moral suasion!

In
any event, any British bank or British-owned bank which operates abroad, is
subject, regulatorily, to both UK regulatory oversight as well as local supervision.

However,
none of this is superceded by the fact that UK law on money laundering
possesses a major extraterritorial implication. It is defined under Section 340,
sub section11 of Part 7 of the Proceeds of Crime Act 2002 as follows;

(11)Money
laundering is an act which—

(a)constitutes an offence under section 327,
328 or 329,

(b)constitutes an attempt, conspiracy or
incitement to commit an offence specified in paragraph (a),

(c)constitutes aiding, abetting, counselling or
procuring the commission of an offence specified in paragraph (a), or

(d)would constitute an offence specified in
paragraph (a), (b) or (c) if done in the United Kingdom.

Sub
paragraph (d) means that it does not matter where in the world a predicate
offence including money laundering took place, if it passes through a UK bank or
institution anywhere in the world, it will be treated for prosecution purposes
as if it had taken place in the United Kingdom.

So
where HSBC Mexico laundered money in Mexico, it still gives the UK Government a
jurisdiction in the UK to deal with HSBC for the actions of its wholly-owned subsidiary.
In any event, it must be certain that much of that dirty money passed through HSBC Latin America Holdings
(UK) Ltd, its parent company, as part of its laundering process.

This
is such a simple concept, it is hard to understand why it is denied, and it is
clear that the FSA does have as much jurisdiction as it wants to exercise, if
it wanted to accept the responsibility. However, the FSA is in a state of
serial denial when it comes to the question of their exercising their powers to
prosecute for breaches of the Money Laundering Regulations or for money
laundering per se.

This
it is why it is that Lord Sassoon stands up in the House of Lords and utters
these ridiculous and misleading words which I hope will come back to haunt him
in the future.

It
is bullshit such as this that means that the ordinary people of Britain are
being misled about the true state of serious criminality being committed by our
banks.

HSBC's
actions in Mexico were deliberate criminal money laundering. HSBC freely and
dishonestly entered into a criminal consipracy to move vast sums of drug money
for Mexican king-pins. They did this because they knew that on a balance of
probabilities, they would probably get away with it, and they took the chance
that they wouldn't get caught.

They
were caught and fined by the Mexican authorities. That does not and should not
mean that they are not subject to UK supervisory oversight, and that they
should not be forced to come to judgement in this country and take the
consequences of their actions.

To
seek to explain away the unwillingness and the inability of a regulator which
has no moral courage for this fight, despite all the evidence to support their
ability to take action, by saying that because the front organisation was not a
UK registered institution, despite the fact that it was wholly-owned by a UK
institution, is to plumb the depths of perfidy.

It
is lies like these which must make the state of British Banking organised
criminality an electoral issue, so that the British tax payers may know exactly
how much banking crime is being covered up in their name!

5 comments:

What can I say Rowan other than thank you for continuing to expose the shadowy and distinctly corrupt ways of the City and their lackeys at Westminster both in the House and Whitehall. Until the Select Committee grow a pair and start acting as if they have a moral compass the rest of us should show them the contempt and disrespect they so deserve. The cancer has now spread; the corruption is endemic and tainting most of the organs of government and for what? The banksters shilling no doubt. A pox on all their houses.

You're surely forgetting the Green factor here - it can't be a coincidence that with Lord 'HSBC' Green as Minister for Trade the FSA/civil service are so reluctant to do anything except twiddle their thumbs with respect to HSBC's money-laundering, can it? Also, don't forget that the City of London is 'the money-laundering capital of the world' according to Max Hastings (to name but one); HMG wants all those drug barons to know the City is still open for business and not get scared off by any silly nonsense about 'regulation', after all..

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About Me

Having spent my career dealing with financial crime, both as a Met detective and as a legal consultant, I now spend my time working with financial institutions advising them on the best way to provide compliance with the plethora of conflicting regulations and laws designed to prevent and forestall money laundering - whatever that might be! This blog aims to provide a venue for discussion on these and aligned issues, because most of these subjects are so surrounded by disinformation and downright intellectual dishonesty, an alternative mouthpiece is predicated. Please share your views with what is published here from time to time!